By Mike Dolan
August 6 (Reuters) –
What matters in U.S. and global markets today
By Mike Dolan, Editor-at-Large, Finance and Markets
Markets slipped into something of a holding pattern overnight as eyes homed in on tomorrow’s July U.S. employment report and what appears to be the latest deal to help end the Iran conflict.
I’ll get into that and more below.
But first, check out my latest column on why the absence of full G7 firepower in the U.S.-Japan joint currency intervention is significant.
And listen to the latest episode of the Morning Bid daily podcast, where we discuss the latest apparent Iran deal and gold’s biggest one-day gain in six months.
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GOLD STIRS
Brent crude sulked below $80 per barrel on Thursday as Iran indicated a plan with Oman may be imminent. But this potential deal appears likely to allow Tehran to retain control of inbound traffic to the Strait of Hormuz. Whether Washington will accept that arrangement is far from certain.
Meantime, the tech-heavy Nasdaq pulled back a touch on Wednesday, stalled by post-earnings stock price flubs from SpaceX and AMD, as well as from high-flying Sandisk and Western Digital. It was a split market, however, as the Dow Jones hit a new high.
Asian equities took their cue from the tech pullback stateside, with South Korea’s KOSPI falling more than 4% and Japan’s Nikkei nearly 1% on Thursday. Wall Street futures were mixed before the bell.
Gold, perhaps reflecting hopes for an end to the Iran war and easing pressure on the Federal Reserve to hike interest rates, had its best day in six months on Wednesday, hitting its highest level in seven weeks. That said, it’s still down nearly 20% from where it was when the Iran war started in late February.
All eyes are now trained on the July U.S. payrolls update due tomorrow. Labor market reports this week have so far come in on the softer side, with below-forecast private-sector jobs gains for July reported by ADP yesterday. Along with the lower oil price, that’s helped take some of the heat out of the rates market and Treasuries.
But markets are also considering what Fed members are saying ahead of next month’s meeting. Overnight, board governor Lisa Cook said she was prepared to raise rates if inflation didn’t come down soon. At the same time, San Francisco’s Mary Daly indicated she was more comfortable with the Fed’s current stance as it awaits more data.
Chart of the day
Gold, an unexpected casualty of the Iran war that has been in the doldrums for months, had its best day in about six months on Wednesday, hitting its highest level in seven weeks.
Although the yellow metal is still down about 20% since the Gulf conflict kicked off, gold seems to be benefitting from the belief that oil’s sharp retreat on the latest hopes for an Iran deal will take pressure off the Fed to hike rates before year-end.
But, as ever, there are numerous aspects to what’s happening inside the gold market, not least the ebb and flow of gold accumulation among central banks and its place in investment portfolios as a diversifier.
Today’s events to watch
• U.S. weekly jobless claims (8:30 a.m. EDT), Q2 labor costs and productivity (8:30 a.m. EDT)
• U.S. corporate earnings: Cloudflare, ConocoPhillips, Warner Bros Discovery
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(By Mike Dolan)
